CHINA COAL ENERGY(601898) EBSCN·2025-05-01 06:06Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for future performance [3][5][12]. Core Views - The company's Q1 2025 performance was impacted by declining coal prices, with a year-on-year revenue decrease of 15.4% and a net profit decline of 20.0% [1]. - Despite the challenges in the coal sector, the company is expected to maintain stable operations and has plans for a mid-term cash dividend of at least 30% of net profit [3]. - The company’s non-coal business showed resilience, with improved profitability in products like polyethylene and methanol, despite a slight decline in overall revenue [2]. Summary by Sections Financial Performance - In Q1 2025, the company reported revenue of 38.39 billion yuan, down 15.4% year-on-year, and a net profit of 3.98 billion yuan, down 20.0% year-on-year [1]. - Coal production slightly increased by 1.9% to 33.35 million tons, while coal prices fell significantly, affecting overall profitability [1]. - The average selling price of self-produced coal was 492 yuan per ton, a decrease of 17.7% year-on-year, leading to a gross profit margin decline [1]. Non-Coal Business - The non-coal business generated revenue of 7.142 billion yuan, down 9.7% year-on-year, but with a gross profit of 2.01 billion yuan, reflecting a smaller decline of 6.6% [2]. - The profitability of polyethylene and methanol improved, with methanol turning profitable with a gross profit of 380 yuan per ton [2]. Dividend and Shareholder Confidence - The company plans to continue its mid-term cash dividend policy, with a minimum payout ratio of 30% based on net profit [3]. - The controlling shareholder, China Coal, plans to increase its stake in the company, demonstrating confidence in its future performance [3]. Earnings Forecast and Valuation - The report forecasts net profits of 17.3 billion yuan for 2025, with corresponding EPS of 1.31 yuan [3]. - The company is valued at a price-to-book (PB) ratio of less than 1, indicating it is undervalued relative to its assets [3].